Ethiopia: Internet shutdowns take their toll on economy

Ethiopia: Internet shutdowns take their toll on economy

Recently, inhabitants of the Ethiopian capital, Addis Ababa, have been gazing forlornly at their smartphones, frustrated by the government’s mobile internet shutdowns.

Since the government declared a six-month state of emergency at the beginning of October in response to escalating violence from protests seething since November 2015, internet restrictions and blocking of applications have increased in frequency. Beyond simple inconvenience, there is a mounting financial cost.

Internet shutdowns in Ethiopia between mid-2015 and mid-2016 lost its economy about $9m, according to a recent study by the US-based Center for Technology Innovation at the Brookings Institution, part of a total cost for 19 countries (including seven African countries) of $2.4bn.

“Internet disruption slows growth, costs governments tax revenue, weakens innovation, and undermines consumer and business confidence in a country’s economy,” says Darrell West, vice president and director of governance studies at the Brookings Institution. “As internet-powered businesses and transactions grow to represent an increasingly significant portion of global economic activity, the damage from connectivity disruptions will become more severe.”

Modern economies undoubtedly rely on the internet – a dependency that is only increasing. A 2015 Internet Association report found that the web generates around $966bn in the US (6% of the entire economy). Meanwhile, the app economy is estimated to be responsible for hundreds of thousands of US jobs. At the same time, digital technology is a vital part of economic development. A 2012 World Bank analysis found a 10% increase in fixed broadband generated a 1.35% increase in per capital GDP for developing countries.

“We’ve seen juice sellers, online banks, courier services, and internet companies all lose drastic amounts of money during disruptions,” says Deji Olukotun of Access Now, which campaigns for digital rights of users at risk around the world. “This especially hurts developing countries, which are striving to embrace the digital economy and innovation.”

Not so social

Since the October state of emergency declaration, internet shutdowns have primarily targeted mobile data connections, but all internet users have experienced blockages of social media including Facebook Messenger and Twitter.

“It’s affecting us a lot. With my type of business we use social media a lot to reach customers,” says Mahlet Afework, founder of Addis Ababa-based fashion label Mafi, which is striving to build its international customer base. “We show our products on social media and new customers often first contact us through those sites – Facebook and Instagram are really important for our business.The restrictions are slowing us down with international sales, for sure.”

One reason often given for the Ethiopian government refusing to open up the communications sector to foreign companies is that it is loath to cede its ability to control communications through state-owned monopoly Ethio Telecom.

“I’ve no idea really what to do – I heard it is possible to get permission, so I’ll go to Ethio Telecom and see if we can be allowed to use social media,” Mahlet says. “Other than that I might hire someone somewhere like London who can do that side of things for me.”

And the negative impact isn’t confined to native Ethiopians. At one embassy in Addis Ababa, internet blackouts have left staff struggling to meet their commitments. “We had an internet blackout for two days.

We couldn’t do anything,” says an office worker. “We have to keep contact with our country and normally I’m sending 10 to 15 emails there a day. I also have to send money there to pay for people participating in a programme of ours but first they need to fill in a form with all their bank details – but I can’t send it to them.”

Across Africa

According to the Brookings Institution report, in 2015 government shutdowns of the internet caused economic losses of $320m in Morocco, $72m in the Republic of Congo and $20m in Algeria. Back in 2011 in Egypt, a five-day internet shutdown during street protests cost the economy $90m.

There can be serious money at stake when it comes to internet access, and more besides: friends and families can’t communicate with each other; public institutions lose access to online information thereby undermining productivity and potentially costing jobs and lives. At the same time, no single rule can apply across the breadth of the African continent.

“Some countries like South Africa, Kenya and Egypt are more integrated than others like Ethiopia, Namibia and South Sudan – so it’s hard to generalise,” says Moses Karanja, an internet policy researcher at Strathmore University in Nairobi. “The take away is all sectors are increasingly being integrated and access to the internet gets more significant.”

Government officials give many reasons, usually of a similar hue, for internet disruptions: safeguarding governmental authority, national security, terrorism, reducing public dissidence, or even protecting local businesses. In the spring of 2015, Burundi blocked WhatsApp and Viber after protestors took to the streets upset at the ruling party putting forward President Pierre Nkurunziza for an unconstitutional third term.

In Ethiopia the government is being candid about blocking social media due to it allegedly stoking unrest. “Mobile data will be permitted once the government assesses that it won’t threaten the implementation of the state of emergency,” Ethiopian government spokesperson Getachew Reda said at press conference in Addis Ababa on 26th October.

Exponential impacts

“These technologies are here to stay, and governments should embrace their promise rather than curtail them – a short-sighted and knee-jerk reaction,” Olukotun says. “Persistent shutdowns – such as those in Ethiopia – have almost exponential impacts on the economy as investors lose confidence.”

But, at the same time, in Ethiopia’s context social media has undoubtedly pulsated with wildly bogus and incendiary claims regarding the protests, typically made by diaspora elements from the safety of places such as the US, where they don’t have to take the risks of those they are encouraging.

“They are at liberty to say whatever they want to cause mayhem in Ethiopia – they call it freedom of speech and they abuse it to their hearts’ content,” commented one foreign politico dealing with the fallout in Ethiopia.

But many Ethiopians automatically turn to external sources due to local and state media being underdeveloped. One particularly prominent social media activist based in the US, Jawar Mohammed, has more than 500,000 followers on Facebook reading its information and viewing footage from protests.

“The media will kill this country, they really will destroy it,” was the assessment by one Ethiopian of social media and diaspora satellite television channels hostile to the current regime. For now Ethiopian businesses are left working through the constraints, with some owners torn between the necessities of business and love for one’s country. “I’m not complaining that much as we want peace for our country,” Mahlet says. “But it’s hard to cope at the same time.”

James Jeffrey

Written by James Jeffrey

After completing a master’s degree in journalism at the University of Texas at Austin in May 2012, James Jeffrey spent a year freelancing in US focusing primarily on business, including writing for the Austin, Houston, San Antonio and Dallas Business Journals. In October 2013 he moved to Addis Ababa, Ethiopia, to write about business-related features primarily, while endeavouring to cover other topics of interest in a remarkable country.

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